California Department of Education's Administration of LEAs' Special Education Maintenance of Effort Compliance Requirement

We issued a special report on a specific issue of concern in California that we identified during the course of our nationwide review. We determined that the California Department of Education instructed LEAs that had not previously met the MOE compliance requirement with local-only special education expenditures that they may use local-only special education expenditure information from an improper base year to demonstrate compliance with the LEA MOE requirement. We found two actual instances in which the California Department of Education allowed LEAs to demonstrate MOE compliance by using improper expenditure information. These two LEAs spent less than they should have on special education programs and were not penalized for doing so. It is possible that additional LEAs in California incorrectly represented that they complied with the MOE compliance requirement by also using an improper base year. Based on our findings, we made a number of recommendations, including that the Department revise its regulations as needed to ensure that LEAs are not permitted to reduce the amount of local funds spent on educating children with disabilities below levels required by IDEA, and determine the amount the California Department of Education is required to remit to the Department as a result of the LEAs using an improper year to meet the actual MOE compliance requirement. The Department partially agreed with our concerns, and said it would consider regulatory change and subsequently published a Notice of Proposed Rulemaking on LEA MOE in September 2013.